annual report - Hypo Real Estate Holding AG

Notes to the consolidated financial statements
1. General information
Risikoberichtbericht
DEPFA BANK plc is a provider of financial services to public sector clients worldwide. The Bank serves public
sector authorities by providing for their financial needs with a broad range of products and services. It is a Dublinbased
public limited company, incorporated under Irish law, with a network of subsidiaries and branch offices
across Europe, as well as in Asia and the Americas. The Group is regulated by the Irish Financial Regulator and the
German Bundesanstalt für Finanzdienstleistungsaufsicht (“BaFin”).
On 2 October 2007 the entire ordinary share capital of the Company was acquired by Hypo Real Estate
Holding AG, which is also the ultimate parent company of the Group.
2. Summary of significant accounting policies
The principal accounting policies adopted in the preparation of these consolidated financial statements are set out
below. These policies have been consistently applied to all the years presented, unless otherwise stated.
Basis of preparation
These consolidated financial statements have been prepared in accordance with European Union (EU) endorsed
International Financial Reporting Standards (“IFRSs”), IFRIC interpretations and the Companies Acts, 1963 to 2006
applicable to companies reporting under IFRS and the European Communities (Credit Institutions: Accounts)
Regulations, 1992. The consolidated financial statements have been prepared under the historical cost conven tion
as modified by the revaluation of available-for-sale investments, financial assets and liabilities at fair value through
the profit or loss and derivatives.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates.
It also requires management to exercise its judgement in the process of applying the Group’s accounting
policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates
are significant to the consolidated financial statements are disclosed in Note 4.
Consolidation
Subsidiaries
Subsidiaries comprise all entities (including special purpose entities) over which the Group has the power to govern
the financial and operating policies. The existence and effect of potential voting rights that are currently exercisable
or convertible are considered when assessing whether the Group controls an entity. Subsidiaries are fully consolidated
from the date on which control is transferred to the Group and cease to be consolidated from the date that
control ceases.
The purchase method of accounting is used to account for the acquisition of subsidiaries. The cost of an acquisition
is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed
at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities
and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition
date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value
of the Group’s share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less
than the net fair value of the identifiable assets, liabilities, and contingent liabilities of the subsidiary acquired, the
difference is recognised directly in the income statement.
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